My #1 Diversification Tip
I often write about diversification and the benefits diversification offers to investors. Diversification is said to be the only free lunch in investing. It allows you to lower risk, without sacrificing meaningful return. The basic concept of diversification is of course intuitive. Don’t put all your... Read the full story
Global House Price Imbalance
According to The Economist, there are still six global real estate markets that are more than 30% overvalued. Australia shows the largest overvaluation at 61.1%, followed closely by Hong Kong and Spain. What happens when these market values return to fair value? Frightening. Read More →
Get Yourself Some Debt
“Get yourself some debt” isn’t the advice you’d expect to hear from your financial advisor. But with interest rates at record lows it makes sense to continue carrying debt in the form of a refinanced 15-year mortgage on your primary residence or vacation home. One of the key advantages of debt... Read the full story
Ethanol Subsidies Four Decades Later – Still Wrong
Survival of the Fattest – Review & Outlook, The Wall Street Journal “The best refutation of the theory of the survival of the fittest is probably the corn ethanol lobby, whose annual $6 billion in federal subsidies have managed to outlive both its record of failure and all evidence and argument…CBO... Read the full story
High-Octane Fuel for Stocks
Since I graduated from Shaker Heights High School in 1959, the most important driver of long-term stock market returns has been the direction of interest rates. Bonds compete with stocks in investors’ portfolios. When interest rates rise, the prospective return on bonds goes up. In order for stocks... Read the full story
An Alternative to Ultra-Low Treasury Yields
The short end of the yield curve remains punishing for investors. Yields on two-year notes are now below the lows reached at the height of the financial crisis, and five-year notes yield a scant 1.68%. Going out longer on the yield curve still isn’t an answer to paltry yields, though. Long bonds... Read the full story
A Raging Bull Market in MLPs
The raging bull market in MLPs shows no signs of slowing. Since the S&P 500 peaked in October of 2007, MLPs have gained more than 33%, while the S&P 500 dropped 25%. YTD, MLPs are up 17%, compared to a loss on the S&P 500. Read More →
Raters Now Liable for Mistakes
Bond Sale? Don’t Quote Us, Request Credit Firms – Anusha Shrivastava, The Wall Street Journal “Standard & Poor’s, Moody’s Investors Service and Fitch Ratings are all refusing to allow their ratings to be used in documentation for new bond sales…Each says it fears being exposed... Read the full story
Big Troubles in China
Hong Kong’s Populist Turn – Review & Outlook, The Wall Street Journal “Hong Kong’s prosperity was built on its economic freedom…So it’s alarming to see the territory’s leaders turning their backs on that tradition…Hong Kong became wealthy by resisting the statist fashions... Read the full story
Vanguard CEO’s Biggest Worry
You can probably count on one hand the people you trust to give you sound investment advice. For a number of reasons, talking about money even with them isn’t always the easiest thing to do, and often it’s worse than talking about religion and politics. Trust is paramount. Two companies that have... Read the full story
